CNN INSIDE POLITICS

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THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. ANNOUNCER: Live from Washington.

JUDY WOODRUFF, CNN ANCHOR: This is INSIDE POLITICS. I'm Judy Woodruff in Washington. Now that Congressman Gary Condit has gone public, has he done himself more political harm than good?

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: I'm Kate Snow on Capitol Hill. Even the House Democratic leader now joining in the criticism of Gary Condit.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: I'm Bob Franken in Modesto, California. We'll compare the claims, the televised claims of Condit with the statements of other key figures in the Chandra Levy case.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I'm Bill Schneider in Washington. Condit may still hope to be reelected to Congress, but he has already lost the race for "Political Play of the Week."

ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. Well, you don't have to look far today to find someone with a strong opinion about what Gary Condit said and did not say in his first TV interviews about missing intern Chandra Levy.

But in the political world, one surprisingly critical voice is standing out. Our Kate Snow joins us with reaction from House minority leader Dick Gephardt. Kate, what did he say?

SNOW: Well, you know, first we should say that he has been very cautious, very measured all along about commenting on Gary Condit. So in that context, these comments, Judy, are particularly revealing. What Congressman Gephardt said today to reporters in St. Louis is that he thought that Condit needed to be candid last night in his television appearance, which by the way, Gephardt watched in St. Louis with his wife and some friends.

He said he thought that Gary Condit needed to be forthcoming, and he thought that he was not.

(BEGIN VIDEO CLIP) REP. RICHARD GEPHARDT (D), MINORITY LEADER: I must tell you, I was disappointed by his statement. I think not being candid and straightforward was disturbing and wrong.

Obviously, his political future, as always, depends on his relationship with his constituents, but what I hoped for last night was a candid statement. It didn't have to be highly specific, but a candid statement and hopefully an apology to his family and to people and his constituents.

(END VIDEO CLIP)

SNOW: As for Condit's political future, Gephardt was asked quite a bit about that. He says he plans to talk with his colleagues about the situation. One thing that has been mentioned repeatedly is whether Congressman Gephardt, as leader of the Democrats, might consider removing Condit from a key position that he has on the House Intelligence Committee.

And I have talked at length with his office -- with Gephardt's office -- about whether he might considered that, and I am told by aides that he is considering it in the sense that it's on the table, but, Judy, that it is not something that he thinks that he's going to do right away, it's not something that he would do single-handedly.

He wants to talk to his colleagues about what the appropriate actions at this point might be -- everything, again, is still on the table -- and this one interview, I am told, you know, is not necessarily enough to prompt Mr. Gephardt to take that kind of an action, but it's certainly something that he could do and certainly his words alone, Judy, carry a whole lot of weight -- Judy.

WOODRUFF: Kate, you mentioned talking to his colleagues. How much do we know about what other Democrats on the Hill are saying?

SNOW: I have been fanning out and talking to as many as I can. Now, some are very reluctant to talk publicly, have been talking to a lot of aides privately here on Capitol Hill, and what is interesting, Judy, not just Democrats but Republicans -- on both sides of the aisle, we're hearing the same thing, that Congressman Condit wasn't forthright enough. Some of the words that have been used to me, "disappointing," "it was a disaster."

One aide says that members are keeping quiet about this and maybe not being so public because, in his words, quote, "you don't throw stones around a cesspool," so certainly a lot of negative reaction coming from both sides, and also the sense, Judy, that Congress may suffer as a result.

Let me show you one other thing that Congressman Gephardt said today to "The St. Louis Post-Dispatch." He said, quote: "I think it fell way short," referring to the Condit interview with Connie Chung. "It adds to the general perception that politics are no good and politicians are a bunch of bums." That sentiment echoed also this afternoon by Congressman Charlie Rangel of New York who said, "this is an embarrassment to the Congress" -- Judy. WOODRUFF: Kate, you talked about Republicans as well. One of those Republicans who's been very critical of Congressman Condit already is Bob Barr of Georgia. Now, is he saying something different and new today?

SNOW: Well, he leaped on to what congressman -- what leader Gephardt said today. Congressman Barr saying, "I'm glad that Dick Gephardt has finally come forward and made some acknowledgement" -- this is Bob Barr's words -- "of the fact that Condit has made mistakes and has not been forthcoming." Congressman Barr then also went on to say that he has sent a third letter now -- remember he already sent two -- to the House ethics panel, asking them again, in light of what Mr. Gephardt has said now, to please look into the ethics of this case -- Judy.

WOODRUFF: All right. Kate Snow at the Capitol.

Well, there is yet another interview with Gary Condit for politicians and the public to dissect today. The "People" magazine's cover story on Condit now is available at news stands, complete with pictures of the congressman and his wife Carolyn.

In that interview, Condit covers much of the same ground as he did in two television interviews that aired last night. Let's talk now about what Condit said with our national correspondent Bob Franken, who is on Condit's political home turf out in Modesto, California.

Bob, we know that Condit has said repeatedly he's cooperated fully with investigators. Let's listen now just briefly to what he said in that television interview with the Californian station KVOR.

(BEGIN VIDEO CLIP)

REP. GARY CONDIT (D), CALIFORNIA: I answered all their questions. I didn't withhold any information. I didn't slow down the process. Matter of fact, I probably provided more information and more cooperative than anyone else in Washington, D.C.

(END VIDEO CLIP)

WOODRUFF: He says he's been cooperative, Bob. What do police say?

FRANKEN: Well, the police are really quite frustrated with him. They point out it took four interviews before they got everything they needed from him. Assistance Police Chief Terrance Gainer in his comments to me said that interviewing Condit is "like pulling teeth," and when the police chief was questioned today about Condit's comments, his answer dripped with sarcasm.

(BEGIN VIDEO CLIP)

CHIEF CHARLES RAMSEY, D.C. METROPOLITAN POLICE: One could say that he answered every question that Connie Chung asked him. He answered every question that we asked him. Now it's up to the others to decide whether or not that's forthcoming and that you got any more out of that conversation after the interview that you did before.

(END VIDEO CLIP)

FRANKEN: And of course, his point is that the chief believes that it was a real struggle to get answers by Connie Chung, a struggle the police chief says is shared by the investigators in this case -- Judy.

WOODRUFF: Now, Bob, another point: Condit said flatly that he did not have a relationship with the flight attendant Anne Marie Smith, she says that they did have a relationship. The reason this is important, of course, is because it goes to the question of whether he obstructed justice by asking her not -- or by asking her to say they didn't have a relationship. What's -- how does one square that?

FRANKEN: Well, at the moment, one squares it by acknowledging that whether they had a relationship or not is a he said/she said question. You have to decide who you believe. Beyond that, there was an affidavit which asked Anne Marie Smith to swear under oath that she did not have a relationship.

Now, what was at the top of that affidavit was a disclaimer from the lawyers saying, in effect, if you don't agree with this, Anne Marie Smith, you can edit or change it anyway you can. So, Congressman Condit is now saying there are two defenses against any charge of obstruction of justice -- one, that disclaimer, and two, he disputes the truthfulness of her claim that they had a relationship.

WOODRUFF: Now, Bob, one other -- another -- I want to ask you about two other things. One is, Condit's statement that he never lied to Chandra Levy's mother, Mrs. Levy -- now, here is an excerpt of what he said in that KOVR interview.

(BEGIN VIDEO CLIP)

CONDIT: I'm sorry if she was misled or there was a misunderstanding, but I never lied to Mrs. Levy about any of the questions.

(END VIDEO CLIP)

WOODRUFF: What are the Levys saying?

FRANKEN: Let us -- well, let us remember first of all that Congressman Condit did not admit that he was having an affair with Chandra Levy, something police sources have told us he did admit to them during the third interview. But in addition, the Levys made it absolutely clear on the "LARRY KING LIVE" program August 15 that there was no misunderstanding.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

SUSAN LEVY, CHANDRA LEVY'S MOTHER: I point-blankly asked him if he was having an affair. And you know, matter-of-factly, he said, no.

(END VIDEO CLIP) FRANKEN: The question about misunderstanding, of course, really encompasses this whole thing, Judy. Condit was saying he was hoping that his constituents, in the letter he wrote, would have a better understanding of his point of view, and there is some question today whether he was able to create such an understanding -- Judy.

WOODRUFF: All right. Bob Franken, reporting from Modesto.

The people behind the Nielsen television ratings estimate that more than 23 million viewers watched the ABC interview with Condit last night. A big draw, but about half the number of people who watched the first television interview with Monica Lewinsky.

Among those who were not watching Condit: President Bush. Our senior White House correspondent John King is with the president in Crawford, Texas -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, Judy. The issue, of course, came up as the president held a news conference today here in Crawford, Texas. Mr. Bush questioned about a number of items, but he was asked if he watched the ABC interview last night, the president said no, that he was among the more than 200 million Americans who decided not to watch. But the president did offer his most extended comments to date on the investigation, making clear that even though he didn't watch the congressman's interview last night, that he believes that the debate about this case in Washington and the media coverage of it often lacks perspective.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm not paying attention to the congressman. I am paying attention to whether or not this poor girl is -- is -- is found. And that's what I am interested in. I understand how Washington works. I mean, there's all kinds of stuff that goes on in Washington. People are saying this about somebody or saying that about somebody. It's a town of gossip. And I'm not worried about the gossip. I am worried about the facts, and there's a girl missing. And our prayers are with her parents. I can't -- I have seen him on TV. I agonized for the mom and the dad. And that's where my heart is.

(END VIDEO CLIP)

KING: Now, the president said he wasn't watching, but he was briefed this morning. His top adviser, Karen Hughes, did watch last night. Said she asked National Security Adviser Condoleezza Rice, also here in Crawford, Texas, to sit in and watch the interview with her. They briefed the president this morning on the substance and privately, many administration officials echo the president's complaint. They believe that this case gets too much coverage in the news media. And they say sometimes for the better and sometimes for the worse, it distracts media coverage from the substance of issues like the budget battle and reforming the military.

WOODRUFF: And John King, we're going to say good-bye to you now. But those are the very subjects we're going to come back to a little later to talk about. John King for now in Crawford, Texas. Now let's discuss Condit's televised remarks with two guests that helped us preview the interview yesterday: Sal Russo, a GOP strategist from California, and Bill Press, from our own "CROSSFIRE." He's a former California Democratic Party chairman. Sal Russo, what did you think of the interview?

SAL RUSSO, GOP STRATEGIST: Well, I don't think it was very successful for Congressman Condit. We talked yesterday about the letter creating a couple of problems for him. There was no apology in the letter. It kind of took on the Levy family, it kind of on took on the police. But we were thinking that perhaps in the interview he would be a little bit more of a sympathetic figure and be able to address those issues. But if anything, I think he's in worse shape today than he was yesterday.

WOODRUFF: What did you make of it, Bill?

BILL PRESS, CO-HOST, "CROSSFIRE": Well, it may sound self- serving, Judy, but I will say it anyhow. I think if he had listened to Sal Russo and me yesterday that Gary Condit would be in better shape today. I think it's what he said and how he looked. First of all, he looked much too tense. He never smiled once during the entire interview. I think that that really hurt him. And secondly, you know, we said yesterday that what he ought to do, very simply, was stand up like a man, admit that he had an affair and apologize and ask forgiveness. He did none of the above. I wonder why he even gave the interview.

WOODRUFF: Sal Russo, was he believable on any point?

RUSSO: I don't think so. I think that he walked out of that interview with a lot more questions than when he walked in. And as I said yesterday, you know, Modesto is the heart of California, it's the Central Valley. These are pretty good people. They want to believe their congressman. I think he had an audience that wanted to believe, they wanted to listen to what he had to say. And I think that they walked out of there with far greater uncertainty than when they walked in.

So I think Gary's in much worse shape today than he was before the letter and before the interview. He's got to come back quickly, because this is going to get out of control if it isn't already out of control.

WOODRUFF: Bill, did you learn anything from the interview?

PRESS: Well, I learned he doesn't have very good advisers. If he does, he doesn't take their advice. You know, I really think, Judy, that Gary Condit had a chance last night to put this behind him, at least his role in this investigation and this tragedy behind him by being forthright. I think that's what his colleagues on the House -- in the House were looking for. That's what his constituents in Modesto were looking for.

Now, he is going to able to give other interviews, but this was the key one and he just simply did not take advantage it. He just decided to stonewall and I thought it was very frustrating and very disappointing.

WOODRUFF: So if this didn't put an end to it, Sal Russo, where do we go from here? I mean, does this story just continue full speed ahead? Has this put any sort of a period on it?

RUSSO: I think what his thinking was -- and the reason that he waited so long -- was to wait for the optimum amount of publicity. The key point in time when everybody's focus would be on him so he can get his story out. That was yesterday. And instead of answering questions, there are now more questions. So I don't think he's going to get a platform as good as he had yesterday. So I think it's going to be much more difficult to turn this around.

He did a local interview yesterday, as well as the Connie Chung interview. That didn't help him either. So it's hard to see how he's going to -- how he's going to pick it up from here. There's a little bit of a pendulum that sometimes swings, and you've got to think at some point there's going to be a little bit of a rally in his favor, but he's got give somebody at least a straw to grasp onto, and so far there is no straw in the barn.

WOODRUFF: So, Bill Press, does this story have all of the fuel that it had a couple of days ago? Has it slowed down at all as a result of this?

PRESS: I think because of Gary Condit's dismal performance last night, it has more fuel than ever, as I said just a minute ago. I think he could have quieted that down. He certainly did not, Judy, and you know, there is 15 months before his next election, but I think Minority Leader Gephardt's words today should come as a warning to Gary Condit. I mean, he has got a chance to get reelected, but he may have just as good a chance by going out and buying a Powerball ticket.

WOODRUFF: All right. On that note, we'll say thanks to Bill Press and Sal Russo. Thank you both, gentlemen. Good to see you two days in a row.

PRESS: Thank you, Judy

WOODRUFF: You can hear Gary Condit's entire interview with Sacramento station KOVR tonight on CNN's "WOLF BLITZER REPORTS." That is at 8:00 p.m. Eastern. And tomorrow at 11:00 a.m. Eastern, CNN's "PEOPLE IN THE NEWS" will profile the California congressman. That profile also will run on Sunday night at 8:00 p.m. Eastern.

And we will have more on the fallout from the Condit interview ahead. Stay with us. This is INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: Joining us now with his reporter's notebook: Bob Novak of the "Chicago Sun-Times." Hi, Bob .

ROBERT NOVAK, "CHICAGO SUN-TIMES": Hi, Judy.

WOODRUFF: First of all, what are you hearing from your sources in California as to the political fallout after Congressman Gary Condit's interview?

NOVAK: The only thing that anybody who is interested in politics is who will win the district in the closely contested House. And up until last night, the feeling by Democrats was that it is such a poor district for the Democrats is that the only person who could win it would be Gary Condit, who's a moderate and very popular in the district.

But after his miserable performance last night, the Democrats that I have talked to, said, boy, they've got to find somebody else. They don't think that anybody else can win the district as it is and it is going to be very difficult to redraft that district in Sacramento to bring more Democrats in without depleting adjoining districts.

So right now, the Republicans, they may be anticipating too much, are talking up a one-seat gain because of the Chandra Levy affair.

WOODRUFF: All right. Swing back east to North Carolina. Jesse Helms announcing his retirement. What are you hearing about the Senate possibilities there now?

NOVAK: The whole Republican establishment, the White House, the Senate Campaign Committee, and the people around Jesse Helms want Elizabeth Dole to run. I think she wants to run. She has always been very apprehensive of a primary fight. And so, former Charlotte Mayor Richard Vinroot, who ran for governor and was beaten last time, him getting in is not a good sign.

The old Republican political operative, Carter Wren is pushing him. They don't believe that he can win a primary against Mrs. Dole, but Mrs. Dole just may not want to run. Nobody thinks that Lauch Faircloth, the former senator will stick in against her although he has been bad-mouthing the White House.

Now Judy, Jim Hunt, the former Democratic governor, very popular, says he doesn't want to run. He doesn't want to run at all, but I am told that the Democratic national chairman Terry McAuliffe is after him to run. They are trying to get Bill Clinton to call him to run. Whether they can prevail on him or not, I don't know. But the Democrats who I talked to think Jim Hunt is the only Democrat who can beat Elizabeth Dole, if she runs in North Carolina.

WOODRUFF: Well, on that point, I talked to Jim Hunt just a few hours ago, at least as of a few hours ago, he was saying he does not intend to run. He said he's got plenty of other things he's working on and he is not going to make that Senate race. But we will see. All right, Bob, back to the rest of your notebook.

A former Senator may be running for Congress?

NOVAK: That's really something. I haven't seen that very much in my, in my 45 years in this town. Rod Grahams, who was a one-term Republican senator from Minnesota, didn't run a very good election for reelection, was defeated last year, wants to come back to Washington and he is going to run for the House against Democrat Congressman Luther's seat.

Mr. Grahams had some personal problems in his defeat for the Senate and the Republicans claim that he has cleaned those up. They think he might be a good House candidate. But I guess if John Quincy Adams can go from president to the House of Representatives, he can go from the Senate.

WOODRUFF: Another Gore-Lieberman ticket? What's that all about?

NOVAK: A lot of friends of Joe Lieberman are very upset, as you know, that he has said that he wouldn't run for president if Al Gore's going to run. But some of the Gore people tell me it's going to be a ticket running. They may, they say, the plans are well along for Gore and Lieberman to announce as a ticket coming into the primary. I have never seen that before, but I guess it could happen.

WOODRUFF: All right. Bob Novak, another look at his notebook. Thank you very much.

And one more note on that North Carolina Senate race: Elizabeth Dole moved one step closer today to getting in the race, officially registering to vote in her old hometown of Salisbury. The county elections director said Dole listed her mother's home address as her official place of residence. Dole said she will make her decision whether to enter the Senate race soon after Labor Day.

Firestone settles a huge lawsuit related to tires on a Ford Explorer.

When we return: Details on Firestone's decision to make a deal in our news update. Plus: The president makes an announcement about the military, and urges Congress to live within its means.

(COMMERCIAL BREAK)

WOODRUFF: President Bush began his news conference today by announcing Air Force General Richard Myers will be the next chairman of the Joint Chiefs of Staff. Myers once headed the U.S. Space Command, and he is considered a strong supporter of the president's plans for a missile defense system.

For more, we rejoin CNN's John King in Crawford, Texas. John, we know the president also talked today about his hopes for defense spending.

KING: He certainly did, Judy. And the president using some feisty and colorful language as he talked not only about his hope for more money for defense -- the president wants $18 billion in the current year -- but also for the overall budget fight that looms when he gets back to Washington next week.

Mr. Bush wants more money for defense. Many in Congress say, where will it come from? The budget surplus is shrinking. Both parties have promised not to touch Social Security money. The president saying today he believed that money was there to fund education and to fund the military, to use his words, if appropriators and the Congress don't go, "hog wild."

The president also seemed perfectly comfortable as he warms for this fight with the choices now faced by Washington. With the tax revenues down because of the economy, money gone out of the Treasury because of the big tax cut. They promised not touch the Social Security money. Congress faces some tough spending choices. Mr. Bush said that that was just fine by him.

(BEGIN VIDEO CLIP)

BUSH: We had the tax relief plan that was important for the fiscal stimulus, coupled with Social Security being off limits except for, except for emergency. That now provides a new kind of, a fiscal straitjacket for Congress. And that's good for the taxpayers. I mean it's incredibly positive news. If you are worried about a federal government that has been growing at a dramatic pace over the past eight years and it has been.

(END VIDEO CLIP)

KING: Now the president realizes he faces a very delicate task when he gets back to Washington. Many Republicans also worried about this budget battle. Many Republicans want to spend money back in their home districts heading into the 2002 election year.

But the president warming to that debate, well aware first-year budget battles often define a presidency and Mr. Bush all but daring the Democrats to the take him on this one. At one point saying, let's have another fight about tax relief, that he was happy to go back to Washington and hear the Democrats say that Washington doesn't have enough money because of the tax cut.

Mr. Bush posed the question himself today, what are they going to do, propose a tax increase?

WOODRUFF: And John, how much tension is the White House feeling over this strong desire, this need on their part to get the defense spending up, and the very tight surplus picture they're facing?

KING: Well, certainly they know there will be pressure from the Democrats. The Democrat will say there is not enough money for education, not even enough money for what Mr. Bush wants to do with the military, not enough for health care benefits like a new prescription drug benefit. ]

And as the president rebuts the Democrats he has to deal with Republicans as well, and many Republicans understand the president's message in Missouri the other day, when he was in Harry Truman's home town about spending was not just directed at the Democrats.

Mr. Bush, in blunt language to congressional Republicans saying you are not going to get all of that earmark spending you wanted. There is no way we can do it. So the president in for a tough sell. He will start by trying to pressure conservatives in the House. The conservatives love this message. They love the tax cut plan. They love the idea that the president is going to go back to Washington and say Washington must live on a smaller budget.

But we are heading into a congressional election year and one way that members of the House and the Senate make friends with the voters back home is to bring back projects, so a tough fight for the president but he seems to be warming for it here at his Texas vacation, his language quite feisty. He knows very well, this is a very tough fight but on he has to win or else he will face charges from the democrats that he is touching Social Security money -- Judy.

WOODRUFF: All right. John King in Crawford.

The budget surplus is just one issue on our agenda in our political roundtable. Joining us now from New York to discuss the week's big stories is Deroy Murdock of Scripps Howard News Service. With me here in Washington are Gail Chaddock of the "Christian Science Monitor" and Clarence Page of the "Chicago Tribune."

Clarence, to you first. This budget that we are talking about, the shrinking surplus, is it going to be a problem for the administration, or an opportunity, as some Republicans are saying?

CLARENCE PAGE, "CHICAGO TRIBUNE": It's going to be a big debate, Judy. In fact we are talking about philosophical differences here. The Republicans have made no secret of their desire to shrink the size of government, to shrink the budget overall, and to return money to their taxpayers.

However, they too, have cherished spending programs like defense, $33 billion of it Rumsfeld said that he liked to have that really hasn't been accounted for in the current projections. The Democrats, meanwhile, have been saying all along that Bush is threatening your Social Security lock box, whether you believe it exists or not, there are a lot of voters out there who don't want that money touched.

WOODRUFF: Gail Chaddock, what are the president's options when it comes to what he wants in this shrinking surplus tight budget?

GAIL CHADDOCK, "CHRISTIAN SCIENCE MONITOR": One thing that he can try to do is make sure that the things that he cares about come up first. The Democrats would love to see defense the very last thing that is dealt with then they can clearly say, look, this is going into Social Security, it can not be as high as it is. He would like to see education first.

WOODRUFF: Deroy Murdock, how do you see this? Is this mostly a problem or an opportunity for the president?

DEROY MURDOCK, SCRIPPS HOWARD: It's a shame, Judy, that President Bush decided to do his press conference on a Friday going into a summer weekend. I don't think that a lot of people are going to hear his message which is a big part of the problem here is a Congress that goes hog-wild, as he put it, over spending.

The surplus is still $158 billion, the second biggest ever. But if Congress keeps spending the way that it is, and this is both the Republicans and the Democrats, the problem will only grow worse. The inflation rate right now is about 2 percent. Medicare spending is going up about 7 percent a year; education spending about is 8 percent a year. The agriculture bill is now $74 billion higher than the budget that was passed just earlier this year.

So if they keep spending like that these surpluses that the Democrats say that they love so much are just going to continue to evaporate.

WOODRUFF: I want to quickly ask each one of you this question: Do you think that the president can do the what he wants to do and not touch Social Security, which you mentioned a minute ago, Clarence?

PAGE: Well, that depends on what by touch, Judy.

(LAUGHTER)

PAGE: The fact is that the OMB projection this week said there is only a $1 billion cushion before you start to dip into Social Security. I don't see how you can do it.

WOODRUFF: Gail?

CHADDOCK: No. What he cares most about is education and the deals he has now, especially with Senator Kennedy, hinges critically on getting a lot more money into poor schools. I don't see how you can do it with the surplus.

WOODRUFF: Deroy?

MURDOCK: Absolutely he can do it. What Bush has to do is get out his veto pen and say I will veto any appropriations bill that goes above the rate of inflation and the growth of the population. And he ought to go after specific things, like Trent Lott's little toy boat in Pascagoula, Mississippi.

He spent something like about $850 million in the last two years on a military vehicle, a big helicopter gunship, I believe it is, that the Pentagon does not want and he is just putting it in there because it benefits his donors and the constituents in Mississippi. And Bush ought to say that's nonsense and try to just veto the appropriations bills that have all that kind of pork barrel spending in it.

WOODRUFF: OK, we can't let you get away without asking you about Gary Condit.

PAGE: Who?

(LAUGHTER)

WOODRUFF: Clarence, did he help himself at all last night, or the course of negative reaction, is that pretty much all that there is to say?

PAGE: The chorus is resounding. I saw one poll today that said 80-20 people thought that he did not help himself. I can't find the 20, Judy. I have been talking to people last night and today. He came across stiff, wooden, evasive. I don't see how he helped himself.

WOODRUFF: Gail?

CHADDOCK: I saw him coming over to this show, the faxes were humming with Democrats who are attacking him. That is the beginning of the end.

(CROSSTALK)

MURDOCK: This is now a bipartisan chorus, a negative chorus that is also bipartisan and with Democrats coming out and criticizing Condit, I think that they realize that this man is just walking wounded and he should have resigned months ago based on his reprehensible behavior, even if Chandra Levy were to turn up alive and well today, his apparent witness tampering, obstruction of justice, impeding a police investigation, all of those are reasons I think that he should have resigned a long time ago. He ought to do it tonight.

WOODRUFF: Let's move to the Senate and to Jesse Helms announced that he is retiring. I want you all to listen just briefly to a segment of something that he said in his statement on television in Raleigh, North Carolina the other night. Let's listen.

(BEGIN VIDEO CLIP)

SEN. JESSE HELMS (R), NORTH CAROLINA: There's no way I can adequately express my gratitude to the thousands of people who pitched in and gave their support and prayers in all five of my elections to the United States Senate. Without that help and without the prayers of so many, I would never have made it, and I know it.

(END VIDEO CLIP)

WOODRUFF: So what do we have in North Carolina without Jesse Helms, Clarence Page?

A whole bunch of people running for his seat...

(LAUGHTER)

PAGE: ... right now in both parties. Right now, it looks to me like -- or of other people, like Elizabeth Dole is the strongest possible contender right now. And she has already asked the folks in Kansas to remove her name from the voting rolls. She's moving back home after 40 years. - voting roles. I think she'll be a strong candidate.

WOODRUFF: Gail Chaddock, what do you think?

CHADDOCK: I think it's going to be a wonderful race to watch, especially on the ground. Where will the Hispanic population in North Dakota that is going -- North Dakota? North Carolina, that's growing very rapidly -- where will they go? The battle is already beginning to...

WOODRUFF: Something we don't hear much about. CHADDOCK: That's right.

WOODRUFF: All right. Deroy Murdock?

MURDOCK: I don't agree with Jesse Helms on everything, but I do admire that fact that he's a guy who actually believes in something and sticks by his principles. It's unfortunately that he's been acting like a bit of a protectionist and trying to put the restrictions on the importation of textiles from Africa. I think that's really unconscionable.

But he's certainly someone who's a free marketeer otherwise, and I think, unfortunately, Elizabeth Dole is someone who is kind of an established Republican, doesn't believe in very much. Doesn't have a lot of interesting ideas. She does have a big name, which might carry her into office. I'd really rather see the Republicans put up somebody who really believes in the limited government agenda, individual rights and personal responsibility.

WOODRUFF: All right. Deroy Murdock of Scrips Howard, Gail Chaddock of the "Christian Science Monitor," Clarence Page of "The Chicago Tribune," great to see you all.

PAGE: You, too.

WOODRUFF: Thanks very much. We appreciate your joining us.

Well, it may seem a little too soon to talk about the fall campaigns, especially in this off election year, but in some states the airwaves are already abuzz. An early check of the political ad wars next.

(COMMERCIAL BREAK)

WOODRUFF: Three major races will dominate the political ad wars this fall. The New Jersey and Virginia governor's campaigns are attracting plenty of cash, but the big money is in the race for New York mayor.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): The deep-pocketed Michael Bloomberg is outspending everyone by a long shot. A lot of his ads focused on crime, and several link him directly to Rudy Giuliani.

(BEGIN VIDEO CLIP)

MICHAEL BLOOMBERG, NEW YORK CITY MAYORAL CANDIDATE: This last mayor and the 40,000 police officers have done a great job. Not perfect, and it ain't done and it's never going to be done.

(END VIDEO CLIP)

WOODRUFF: Bloomberg's opponents are also on the air, but you have to look a great deal harder to find them. And their attitude toward Mayor Giuliani is quite different. Public advocate Mark Green gets some help from Rudy Giuliani's former police commissioner.

WOODRUFF: Bronx' borough president, Fernando Ferrer, slams Giuliani, even as he promotes his own plan for an after-school program.

(BEGIN VIDEO CLIP)

ANNOUNCER: Fernando Ferrer says what the others won't, that saving young lives is worth more to families than Rudy's pennies-a-day tax cut.

(END VIDEO CLIP)

WOODRUFF: City council president, Peter Vallone, called on former Mayor Ed Koch, a Giuliani rival, to make his case.

(BEGIN VIDEO CLIP)

FORMER MAYOR ED KOCH, NEW YORK CITY: He won't have to learn the job. As they say, he's been there, done that. I know!

(END VIDEO CLIP)

WOODRUFF: City controller Alan Hevesi is trying to institute a memorable catch phrase.

(BEGIN VIDEO CLIP)

ANNOUNCER: Most experienced, best qualified.

(END VIDEO CLIP)

DAVID PEELER, CNN CONSULTANT: The New York mayor's race so far, in terms of media spending, has really been all about name i.d. Michael Bloomberg, who had no name i.d. in the general voter population six months ago, has spent $10 million to get his name up there. Alan Hevesi is been more of a known name, known quantity here in New York, and so he spent $3 million in order to boost his name ID. Mark Green has only had to spend $350,000 or so so far, because Mark Green is a very, very well-known entity here in New York.

It's a very long, hot summer in New York. Nobody's really paying attention to the election at this point in time, so what they're really trying to do is position themselves for the post-Labor-Day time period, where they're really going to have to race for the goal line. And name i.d. is going to count then. WOODRUFF: In the Virginia governor's race, Republican Mark Earley talks about cutting a tax on food in one ad, then joins his son to talk education.

MARK WARNER (D), VIRGINIA GUBERNATORIAL CANDIDATE: Because helping every Virginian get the skills they need to compete, that's what my campaign for governor is all about.

(END VIDEO CLIP)

PEELER: All the money in the Virginia's governor's race has been about Mark Warner. Mark Warner ran unopposed in the primary. That enabled him to spent $2.5 million, really, to get his message out there and to get his bio out there, so that the people in Virginia knew who he was. The challenger that he's facing now, Earley, who had to run a very, very contested Republican primary, has only been able to spend a little over $450,000 in that same general election effort.

So clearly he's coming from behind. Mark Warner spent a lot of money all over the state, including the Washington, D.C. area, which gets into Northern Virginia. Earley stayed away from it. He spent it all in downstate, so clearly you can tell that Earley's polls are telling him that he's not doing real well in Northern Virginia, don't waste the money up there.

WOODRUFF: In the New Jersey governor's race, Democrat Jim McGreevey has run ads pledging to fight for the middle class, ending with a personalize road sign. His opponent, Bret Schundler also has roads on his mind, promising to abolish the hated highway tollbooth.

(BEGIN VIDEO CLIP)

BRET SCHUNDLER, NEW JERSEY GUBERNATORIAL CANDIDATE: And I'm going to be the guy who's first in the line with the sledgehammer.

(END VIDEO CLIP)

PEELER: The story here is very similar to the story in Virginia. Jim McGreevey, the Democrat candidate, ran unopposed in the primary. He's been able to spend $1.7 million so far in really getting his message out to the New Jersey voters. As opposed to his candidate, Bret Schundler, who ran in a very contested Republican primary. He, so far, has only spent $88,000 in the general election.

I think what's different here, however, is that Bret Schundler got a bump coming out of the primary. You know, he ran very well, he was kind of the underdog up until the end. He pulled it across the finish line, so he got an awful lot of free press around his victory, around the primaries, so maybe that non-paid media time will balance it out in the end.

(END VIDEOTAPE)

WOODRUFF: Meanwhile, New Jersey Democrats filed a lawsuit this week against the Republican National Committee, accusing the RNC of trying to skirt state campaign spending laws.

There's not much going on in Washington right now. But Washington, like the rest of the country, is focused on the same story. Bill Schneider joins us next to tell us how it figures into the "Political Play of the Week."

(COMMERCIAL BREAK)

WOODRUFF: The Chandra Levy investigation has once again turned the spotlight on the media, especially the way everyone from police to Gary Condit have used news outlets to make their case to a wider audience.

And joining me now with more on these so-called media strategies: CNN political analyst Bill Schneider -- Bill.

SCHNEIDER: You know, Judy, Gary Condit clearly has a media strategy, but it may have blown up in his face last night when he asked people to believe that practically everyone in this case is lying except him.

But Condit is not the only one with a media strategy. The Levy family has one, too; and theirs is working. Their nonpolitical strategy is the "Political Play of the Week."

ABBE LOWELL, CONDIT'S ATTORNEY: I think everybody understands that the Levys have a keen interest in keeping their daughter's name and picture in the news. And I think they have felt over the last couple of weeks it began to fade; and I think the media has proven that the way you get this story back in the news is you say the name Gary Condit.

SCHNEIDER: Message: Condit is a victim of the Levys' media strategy. But not even Condit can claim to be a victim compared with what the Levy family has endured.

CONDIT: It's been tough. But the reality about this is it's not about the Condits. It's about the Levys. It's -- what we're going through is minor in comparison as to what Dr. and Mrs. Levy are going through.

SCHNEIDER: What do the Levys want from Condit?

BILLY MARTIN, LEVYS' ATTORNEY: We believe you have information that the family would like to know. We'd like you to meet with our investigators so that our investigators have direct information on Chandra's state of mind at the time that she disappeared.

SCHNEIDER: They didn't get much from him last night; but because his interview raised more questions than it answered, Condit will be under more pressure now to cooperate with the investigation. Are the Levys using the media? Of course they are. Anything to help them find their daughter. And who can blame them?

R. LEVY: They've done some good investigation. I mean, they brought some things out that wouldn't have come out if those magazines hadn't investigated or hadn't brought it out. So we have to be thankful to them.

SCHNEIDER: The Levys have used every opportunity to keep public attention on their case. They're using the skills and resources of a missing persons foundation. They've started a support group for other distraught families. And they've kept the pressure on Congressman Condit.

MARTIN: I think the Levys are so -- in such grief and pain right now, and they believe that Congressman Condit has caused that grief and pain. They believe it's been the actions of Congressman Condit is -- he did not come forward.

SCHNEIDER: They Levys have one immense advantage in all this: They're not political.

S. LEVY: And the politics doesn't enter the picture for me.

SCHNEIDER: That's Condit's disadvantage: Everything he says is seen in a political light. This week, the Levys got a payoff: They forced Condit to speak publicly. The story is white hot. Their daughter's name and picture are everywhere.

The Congressman said one thing the Levys needed him to say: This is not about me, this is about her. That's their message, and it's the "Political Play of the Week."

(END VIDEOTAPE)

SCHNEIDER: This story involves two mysteries: Chandra Levy's mysterious disappearance and Gary Condit's mysterious behavior. The Levys' strategy is, keep up the media's interest in the Condit's behavior, and it could help solve the only mystery that really matters -- Judy. WOODRUFF: We all hope so.

SCHNEIDER: Yes.

WOODRUFF: All right, Bill Schneider, thanks very much.

And this programming note: Congressman gary Condit's attorney Abbe Lowell will be a guest tonight on "LARRY KING LIVE." That is at 9:00 Eastern.

More INSIDE POLITICS after this.

(COMMERCIAL BREAK)

WOODRUFF: Here's a name you haven't heard from lately: Since Newt Gingrich stepped down as speaker of the House, he's kept busy as a public speaker and a political pundit. But it turns out he has also an unpaid gig as a book reviewer. Gingrich has posted 47 of his personal book reviews on amazon.com, which means he now ranks as one of the Web site's top 500 reviewers. Now, that entitles him to his own page on the site, featuring his photograph and his biography as well as his reviews of a wide range of books. Gingrich is quoted as saying he does it for the fun of it. We know he's a great reader.

For now, some CNN programming changes that will take effect on Monday: "LOU DOBBS MONEYLINE" will start a half-hour earlier at 6:00 p.m. Eastern, immediately following INSIDE POLITICS, this show. CNN's "FIRST EVENING NEWS" with Bill Hemmer moves to 7:00 p.m., and "CROSSFIRE" remains at 7:30 p.m. Eastern.

I'm Judy Woodruff. That's all for this edition of INSIDE POLITICS. Have a good weekend.

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